Income Tax Appellate Tribunal - Pune
Assistant Commissioner Of ... vs M/S. Shree Panchaganga Agro Impex Pvt. ... on 7 July, 2017
आयकर अपील य अ धकरण] पण
ु े यायपीठ "ए" पण
ु े म
IN THE INCOME TAX APPELLATE TRIBUNAL
PUNE BENCH "A", PUNE
BEFORE MS. SUSHMA CHOWLA, JM AND
SHRI ANIL CHATURVEDI, AM
आयकर अपील सं
. / ITA No.613/PUN/2015
नधा रण वष / Assessment Year : 2007-08
The Asst. Commissioner of Income Tax, .......... अपीलाथ /
Circle -6, PMT Building,
Appellant
Swargate, Pune - 411 037.
बनाम v/s
M/s. Shree Panchaganga Agro Impex .......... यथ /
Pvt. Ltd. Gat No.559,
Respondent
Pune Nagar Road, Wagholi,
Pune - 412207.
PAN : AAFCS6775C.
अपीलाथ क ओर से / Appellant by : Shri Yogesh Kamat.
यथ क ओर से / Respondent by : Shri Prayag Jha &
Shri Prateek Jha.
सन
ु वाई क तार ख / घोषणा क तार ख /
Date of Hearing : 31.05.2017 Date of Pronouncement: 07.07.2017
आदे श / ORDER
PER ANIL CHATURVEDI, AM :
This appeal filed by the Revenue is emanating out of the order of Commissioner of Income Tax (A) - 4, Pune, dt.16.02.2015 for the assessment year 2007-08.
2. The relevant facts as culled out from the material on record are as under :-
2.1 Assessee is a company stated to be engaged in the business of import and export and trading of spices, dry fruit and processing of agro products etc. Assessee initially filed its return of 2 income for A.Y. 2007-08 on 31.10.2007 declaring total income of Rs.78,09,387/-. Assessee thereafter revised its return of income on 12.03.2008 declaring total income of Rs.41,40,126/-. The case was taken up for scrutiny and thereafter the assessment was framed u/s 143(3) of the Act on 31.12.2009 on the basis of revised return of income. Subsequently Ld.CIT observed that the assessment order framed by the AO u/s 143(3) of the Act was erroneous and prejudicial to the interest of Revenue. He accordingly passed an order on 29.03.2012 u/s 263 of the Act and directed the AO to make fresh assessment after considering his observations made therein. Pursuant to the order of Ld.CIT, AO passed order u/s 143(3) r.w.s. 263 of the Act vide order dt.28.03.2013 and determined the total income at Rs.56,97,960/-.
Aggrieved by the order of AO, assessee carried the matter before Ld.CIT(A), who granted partial relief to the assessee. Aggrieved by the order of Ld.CIT(A), Revenue is now in appeal before us and has raised the following grounds :
"1. The order of the Commissioner of Income-tax (Appeals) is contrary to law and to the facts and circumstances of the case.
2. On the facts and in the circumstances of the case and in law, the Learned Commissioner of Income-tax (Appeals) has erred in directing the Assessing Officer to verify the claim of set off of speculation losses brought forward from A.Y.2005- 06, as the Income-tax Act does not empower the CIT(A) to set aside the matter to the A.O.
3. On the facts and in the circumstances of the case and in law, the Learned Commissioner of Income-tax (Appeals) has erred in directing the Assessing Officer to verify the claim of payment of TDS by the assessee, which is not supported by the Revised Return in contravention of the Supreme Court decision in case of Goetze (India) Ltd vs. CIT(2006) 284 ITR 323 (SC)."
4. For this and such other reasons as may be urged at the time of hearing, the order of Ld.CIT(A) may be vacated and that of the Assessing Officer be restored."
3
3. Though Revenue has raised various grounds before us but the sole controversy as per both the parties is the direction of Ld.CIT(A) to verify the claim and thereby setting aside the matter to AO.
4. Ld.CIT(A) noted that assessee was denied the claim of set of speculation losses of Rs.1,66,148/- which has been brought forward from A.Y. 2005-06. It was submitted that though the claim was allowed in the original assessment order the same not allowed as deduction by JCIT in order passed u/s 143(3) of the Act. On this issue we find that Ld.CIT(A) has directed as under:
"4.1 On this issue, it is seen that the losses claimed pertained to A.Y. 2005-06 which should be set off against any speculative prom earned for the A.Y. 2006-07 and as per the provision of sec. 73(1) & (2), the same can only be set off against speculation profit for the same year or carried forward to the following assessment year and so on. The Assessing Officer is therefore directed to verify from the record whether such speculative profit are allowable to be carried forward and set off and allow the same as per the provision of sec.73(1) & (2). For statistical purposes this ground is considered as allowed."
5. Revenue is aggrieved by the direction given by Ld.CIT(A) for verification of the claim.
6. Before us, Ld.D.R. submitted that Ld.CIT(A) does not have power to set aside the matter to AO. He thus supported the order of AO. Ld.A.R. on the other hand, supported the order of Ld.CIT(A) and submitted that brought forward losses from A.Y. 2005-06 is undisputed and since AO while framing the order u/s 143(3) r.w.s 263 of the Act had wrongly not allowed the deduction the 4 necessary directions were given by Ld.CIT(A) which he was justified. He thus supported the order of Ld.CIT(A).
7. We have heard the rival submissions and perused the material on record. It is an undisputed fact that Ld.CIT(A) does not have power to remand the matter to AO but in the present case, we find that Ld.CIT(A) has sent the matter to AO but it is only for the factual verification of allowability of losses as per provision of Secs.73(1) and (2) more so when the claim of carry forward of loss for A.Y. 2005-06 was allowed by AO which passing the order in A.Y. 2005-06. In such a situation, we find no error in the order of Ld.CIT(A) and thus the ground of Revenue is dismissed.
8. Second ground is with respect to allowing claim of payment of TDS.
8.1 Assessee had claimed deduction u/s 40(a)(ia) with respect to the amounts on which TDS was deducted and was deposited in the Government account before the due date of filing of return. AO did not allow the claim of such amounts aggregating to Rs.36,79,391/- by invoking provisions of Sec.40(a)(ia) of the Act. Aggrieved by the order of AO, assessee carried the matter before Ld.CIT(A), who decided the issue in favour of the assessee by holding as under :
"5.1 In the Tax Audit Report, a copy of which placed is placed at 'paqes 22 to 26, in para-17 (f), it was mentioned , "In the following cases there is delay in 'payment of TDS and may attract the provisions of section 40(a)(ia)." In the computation to total income this amount was added back. However, during the original assessment proceedings, it was submitted that the tax was deducted on these payments as per law and the said TDS was 5 deposited in account of Central Government before the due date of filing of return as provided in Section 139 (1). Therefore, the expenses were not disallowable u/s 40(a) (ia). Time for filing a revised return was not available at that point of time. Hence the return could not be revised but a claim was made before the ld AO.
5.2 The ld AO, who passed the original order, allowed the deduction of this amount. However, in the assessment order passed u/s 143(3) rws 263, this deduction has not been allowed perhaps in view of the judgment of Supreme Court in the case of Goetze (India) Ltd. V CIT [2006] 284 ITR 323 (SC).
5.3 In this regard, it is submitted that the facts on the issue are that the assessee complied to the TDS provisions. There was no default in making TDS. Tax deducted at source was also deposited in the account of the Central Government within the F Y 2006-07. On certain payments and provisions tax was deducted in the month of March 2007 but deposited in Government Account after 31/03/2007 but before the due date of filing of return as provided u/s 139(1). For the A Y 2007-08 due date of filing of return was 31/10/2007. Therefore, provisions of section 40(a)(ia) were not attracted to such expenses. Copies of ledger account of deposit of TDS in the account of the Central Government are placed at pages 27 to 33.
5.4 It is further submitted that a rightful claim of the assessee cannot be rejected only on technical ground that return was not revised or that this would reduce the total income returned. Attention is drawn to the Circular No-14 (XI-35) of 1955 dated 11- 04-1955 of the Department, a copy of which is placed at pages 34. The Department has exhorted its officers not to take advantage of ignorance of an assessee and allow the claim as per law.
5.5 As for as the judgment in the case of Goetze (India) Ltd v CIT [2006] 284 ITR 323 (SC) is concerned it has been held in several cases that the ratio of this judgment is not applicable to higher authorities such as the CIT(A) and the ITAT. The Supreme Court has considered the powers of the AAC (now, CIT(A) in several case a few of them are the following :-
Jute Corporation of India Ltd v CIT [1990) 187 TR 688 National Thermal Company Ltd v CIT [1998] 229 ITR 383 CIT v Nirbheram Deluram [1997] 224 ITR 610 (SC).
The Apex Court has held that the scope of powers of AAC is coterminous with those of the ITO. He can do what the ITO can do and also direct him to do what he has failed to do.
5.6 Recently the Hon'ble Gujarat High Court in the case of CIT v Mitesh Implex [2014] 367 ITR 85 (Guj), has categorically held that new claim can be raised before the CIT(A) or Tribunal for the first time. The Delhi High Court also has held similar view in the case of CIT v Jai Parabolic Springs Ltd [2008] 306 ITR 42 (DeI). A copy of 6 judgment of the Delhi High Court is placed at pages 35 to 37 of this Paper Book.
5.7 This issue has been considered recently by the Bombay High Court in the case of CIT v Pruthvi Brokers and Shareholders P Ltd [2012] 349 ITR 336 (Bom). The Hon'ble Court has held that the assessee is entitled to raise not merely additional legal submissions before the appellate authorities but is also entitled to raise additional claim before them. The appellate authorities have the discretion to permit such additional claim to be raised. A copy of this Judqment is placed at pages 38 to 47.
5.1 I have considered the submissions made and find that the issue regarding admission of new and additional claim by the appellate authorities, which might not have been claimed in the return of income through inadvertence, has been answered in the affirmative by several judgments of the Supreme Court and Hiqh Courts. The observations of the Supreme Court in Jute Corporation India Ltd. (187 ITR 688) and in Gurjarqravures (P) Ltd. (111 ITR 1), the Delhi High Court in Jai Parabolic Sprinqs Ltd. (306 ITR 42) and Bombay High Court in the case of Pruthvi Brokers and Shareholders (349 ITR 336) are to the effect that where there is a genuine error on the part of an assessee in not claiming deduction in return of income and there is no finding that the claim made is malafide, an additional claim of the assessee may be entertained by the appellate authorities. The claim made by the appellant relates to payment of TDS into the Govt. account before the filing of return.
The fact that there was a belated payment of TDS was mentioned in the audit report in column 17(f) and also column 27(a). Since the time of filing of a revised return was over, the appellant requested the Assessing Officer both during the original assessment proceedings and subsequent reassessment proceeding consequent to see. 263, to grant deduction for an amount of Rs.36,79,391/- which was paid prior to the clue date of filing return u/s 139(1). Therefore all the facts and particulars arise from the prior proceedinqs and were before the Assessing Officer. Accordingly, the ground raised by the appellant is permitted to be raised. 5.1.1 Coming to the merits of the ground raised, the provision of sections of 40(a)(ia) for the relevant year provide for allowance of the claim in the year in which the tax deducted at source, is paid into Govt. account. The provision of the statute for the relevant accounting period reads as under:
(ia) any interest, commission or brokerage, [rent, royalty,] fees for professional services or fees for technical services payable to a resident, or amounts payable to a contractor or sub-contractor, being resident, for carrying' out any work (including supply of labour for carrying out any work), on which tax is deductible at source under Chapter XVII-B and such tax has not been deducted or, after deduction, has not been paid during the previous year, or in the subsequent year before the expiry of the time prescribed under sub-
section (1) of section 200 : ' Provided that where in respect of any such sum, tax has been deducted in any subsequent year or, has been deducted in the 7 previous year but paid in any subsequent year after the expiry of the time prescribed under sub-section (1) of section 200, such sum shall be allowed as a deduction in computing the income of the previous year in which such tax has been paid.
5.1.2 As a result of the amendment in the statute by the Finance Act 2010 w.e.f. 01.04.2010 the section was amended wherein, with respect to any of the sums on which tax is deductible but has not been deducted or after deduction has not been paid on or before the due date specified in sub-see. (1) of section 139, the amount is not allowable. The proviso to sec. 40(a)(ia) was Introduced from the same date to provide that, wherein with respect to any of the sums on which tax has been deducted during the previous year but paid after the due date specified in sub-sec. (1) of section 139, such sum shall be allowed as a deduction in computing the income of the previous year in which such, tax has been paid. Although the amendment has come into effect from the assessment year 2010- 11, several High Courts have now held that the amendment has retrospective effect. The decisions of the High Courts being as under:
(i) CITVs Crescent Export Syndicate (216 Taxman 258)(Cal.)
(ii) CITVs Santosh Kumar Shetty (227 Taxman 170) (Karn.)
(iii) CIT Vs B.M.S. Projects (P.) Ltd. (44 taxrnann.corn 06)(Guj.) 5.1.3 So far as the effect of the amendment to sec.40(a)(ia) by the Finance Act, 2008 retrospectively w.e.f. 01.04.2005 is concerned, several courts have also held where tax is deducted and deposited within date specified u/s 139(1),the same cannot be disallowed.
These are Karnataka High Court in Anil Kumar & Co. (214 taxman
202), Delhi High court in Naresh Kumar (39 taxmann.com H12) and Rajinder Kumar (39 taxmann.com 126), J&K High Court in J & K Cooperative Housing Corporation Ltd. (43 taxmann.com 149), Rajasthan High Court in Choudhary Construction Company (42 taxmann.com 547) and Gujarat High Court in Royal Builders (40 taxmann.com 464).
5.1.4 There is only one contrary decision of the Special Bench Bombay Tribunal in the case of Bharati Shipyard (132 ITD 53) stating that ordinarily, a substantive provision is "prospective" in operation and courts cannot give it "retrospective effect" except in limited circumstances where, say, the amendment makes explicit what was earlier implicit or where the amendment was to remove unintended consequences in the existing provision and to make it workable. A provision giving relief cannot be regarded as retrospective only because the original provision caused hardship to the assessee. S.40(a)(i) caused "intended difficulty" with the object of discouraging non-compliance with the TDS provisions. A partial relaxation in its rigor, inserted with prospective effect, cannot be treated as "retrospective".
5.1.5 Yet in view of the overwhelming number of High court decisions to the contrary holding that the amendment introduced in sec.40(a)(ia) are retrospective, it is found appropriate to issue directions to the Assessing Officer to verify and allow those amounts on which TDS has been deposited in the Govt. account 8 prior to the due date of filing the return of income for the impugned year. Ground no.2 is treated as allowed to this limited extent." Aggrieved by the order of Ld.CIT(A) Revenue is now in appeal before us.
9. Before us, ld. D.R. supported the order of AO and submitted that Ld.CIT(A) has erred in directing the AO to verify the claim of payment of TDS by the assessee which is not supported by the revised return in contravention of Hon'ble Supreme Court decision in the case of Goetze (I) Ltd., Vs. CIT reported in 284 ITR
323. On the other hand, Ld.A.R reiterated the submissions made before AO and ld. CIT(A) and further submitted that assessee had already deposited the TDS before the due date of filing the return and since the time limit for filing the revised return had lapsed, the request was made before Ld.CIT(A) who has rightly allowed the claim of the assessee. He thus supported the order of Ld.CIT(A).
10. We have heard the rival submissions and perused the material on record. In the present case, there is no dispute that assessee had deducted the TDS and the same was deposited in the Government account before the due date of filing of return of income. The aforesaid fact has been confirmed by the auditor in the tax audit report and there is also a finding of the Ld.CIT(A) to that effect. Ld.CIT(A) had allowed the claim of the assessee by following the decisions cited by him in the order. We further find that Ld.CIT(A) had followed the decision of Hon'ble Bombay High Court in the case of CIT Vs. Pruthvi Stock and Shareholders (P) Ltd., reported in 349 (ITR) 336, wherein Hon'ble High Court has 9 held that wherein there was a genuine error on the part of the assessee in not claiming deduction in the return of income and when the claim of assessee is not malafide, the appellate authority can entertain the claim of assessee. Before us, Revenue has not placed any material on record to demonstrate that the findings of Ld.CIT(A) was incorrect or the reliance placed by Ld.CIT(A) on the decisions cited in the order was not correct. In such a situation, we do not find any error in the order of Ld.CIT(A). Thus, the grounds of Revenue is dismissed.
11. In the result, the appeal of the Revenue is dismissed.
Order pronounced on 7th day of July, 2017.
Sd/- Sd/-
(SUSHMA CHOWLA) (ANIL CHATURVEDI)
या यक सद!य / JUDICIAL MEMBER लेखा सद!य / ACCOUNTANT MEMBER
पुणे Pune; दनांक Dated : 7th July, 2017.
Yamini
आदे श क# $ त&ल'प अ(े'षत/Copy of the Order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent
3. CIT(A)-II, Pune.
4. CIT-2, Pune.
5. #वभागीय &त&न'ध, आयकर अपील य अ'धकरण, "ए" / DR, ITAT, "A" Pune;
6. गाड, फाईल / Guard file.
आदे शानस ु ार/ BY ORDER,स // True Copy // सहायक रिज12ार/ Assistant Registrar, आयकर अपील य अ'धकरण ,पुणे / ITAT, Pune. /